Cat, Wal-Mart team up for Rx

Caterpillar Inc. and Wal-Mart Stores Inc. have embarked on a pilot drug program that could revolutionize the prescription drug industry, officials from both companies said Monday.

PAUL GORDON

Caterpillar Inc. and Wal-Mart Stores Inc. have embarked on a pilot drug program that could revolutionize the prescription drug industry, officials from both companies said Monday.

Select salaried and management employees of Caterpillar as well as its retirees and surviving spouses can get Tier-1 generic drugs filled for no co-payment at all Wal-Mart, Sam's Clubs and Neighborhood Market stores now through Dec. 31, 2009, as part of the program that began earlier this month.

The co-payment for the generic drugs is $5 at other pharmacies.

While about 70,000 Caterpillar employees are affected now, that could expand to include union-represented employees who opt into the company's HMO plan beginning Jan. 1, 2009, said spokeswoman Rachel Potts. Open enrollment begins in November.

"This is completely voluntary. It's a pilot program because we want to see if this would be sustainable. If it delivers everything we hope it does, starting with quality service, it could be a success," Potts said.

Still, she said the company isn't ready to commit to anything in the future until it can study the results of the pilot program. "We are only two weeks into the program, but we are encouraged by what we've seen so far."

The goal of the pilot program, on which Caterpillar and Wal-Mart negotiated for several months, was to remove unnecessary costs from the health care equation, said Todd Bisping, Caterpillar's pharmacy benefits manager.

It does that by eliminating the middle man, so to speak, in the pharmaceutical management process. Most companies contract with an outside pharmacy benefits manager to set rates on prescription drugs, rates co-payments are designed to cover to defray the company's costs.

Caterpillar negotiated directly with Wal-Mart on the rates, saving it money and enabling Caterpillar to then waive the co-payment for its employees and retirees, Bisping said.

"We are eliminating waste from the supply chain through a direct contract with Wal-Mart. This is a first in the industry, so you can be sure other industries are keeping a close eye on how this works. This has the potential to shake up the way things are done now," Bisping said.

Neither he nor Potts would disclose how much Caterpillar expects to save through the program. "But we would not do something like this if we didn't expect significant savings for the company and our employees," Potts said.

Christi Gallagher, a spokeswoman for Wal-Mart, said her company would benefit by convincing other companies to do similar programs.

"We are speaking to other companies every day, but we were very keen to start with Caterpillar because it is recognized as an industry leader, as a company and in terms of benefits," Gallagher said.

She said Wal-Mart believes it can leverage its expertise in supply chain management to save money for any company.

"Our goal is to help our customers save money," she said. She added Wal-Mart's program offering some generic drugs for $4, started in the fall of 2006, has already saved its customers more than $1 billion.